Key points:
- Now is a great time to buy a home if you want to beat the competition.
- The daily average mortgage rate hit a 14-month low of 6.34% on Monday, giving buyers thousands of dollars more purchasing power.
- Don’t wait to buy; buyers scared off by high interest rates are preparing to enter the market, which may push prices higher.
- The total number of listings is also up 20% from last year, so there’s plenty of inventory to choose from.
On Monday, August 5, the average daily interest rate on a 30-year fixed mortgage plunged to 6.34%, the lowest level since April 2023. Other loan products fell to the high range of 5% to 6%. This is because Jobs report unexpectedly weak This has fueled fears of a coming recession and triggered Global markets cool.
follow series of eventsOn August 6, interest rates climbed to 6.52%, above Monday’s low but well below April’s peak of 7.5%. In fact, today’s homebuyers already have access to Nearly $30,000 (approximately $200 per month) purchasing power since early July. Many experts now predict the Fed will begin cutting interest rates beyond expectation That could push mortgage rates further down in September.
As more sellers enter the field, the total number of listings is up 20% from last year. The market appears ready to give buyers a breather. So if you’re thinking about buying, you may be wondering, “Should I buy a home now or wait?”
Is now a good time to buy a home?
Short answer: Yes, if you can afford it, now is a good time to buy a home before the market catches up. Waiting for interest rates to drop further puts you at risk of increased competition among buyers and subsequent price increases by sellers.
Buying a home now means you, too, can maximize your investment potential. A lower interest rate saves you money over the life of your loan and means you save more money mortgage payment Can work towards establishing equity.
It is worth noting that the market has upside down But recently. For example, higher mortgage rates, which typically push home prices down, have had the opposite effect over the past two years. Additionally, falling inventory often results in increased competition but prices that are too high for many buyers to afford, resulting in some homes going unsold while others selling within days.
Additionally, economists aren’t entirely sure what will happen to mortgage rates in the coming months, and home prices remain close to record high. The week begins with good news, but it is important to be prepared for any surprises that may arise.
Will mortgage rates drop further in 2024?
Today’s mortgage rates reflect investor sentiment on what actions the Fed will take. Investors believe the Fed has completed its plan to limit inflation expected to gradually decline Mortgage interest rates at the end of the year.
In other words, economists don’t expect mortgage rates to fall any deeper than they are now, since today’s rates already reflect September’s expected rate cut.
How did we get here?
There has been an acute housing shortage over the past decade. This is part of the reasons Real estate boom in 2021-2022; too many buyers competing for homes, tight supply leading to Prices soar. Record-low mortgage rates are also fueling the madness. (Low supply is partly due to Chronic under construction Residence since the 1980s.
However, in 2023 and 2024, Construction rebounds and start stocking recover slowlyEven though mortgage rates remain high, prices are rising. Higher interest rates typically lead to lower demand and lower prices. That’s not happening, however, as many homeowners with pandemic-era home prices are unwilling to give up, leading to a further shortage of homes for sale.
This is a unique trend This continues to this day – the national median sales price is Record high in June And many people are still there Avoid the market common. Those who do buy usually do so at affordable places, e.g. Texas and upstate new york. Despite increasing inventory low sales Nationwide, housing prices hit record highs small signs Falling.
However, the recent decline in mortgage rates has given homebuyers a glimmer of hope.
Home sellers should prepare for competition
The recent drop in mortgage rates has set the stage for more buyers to enter the market, which means more competition for listings.
That’s because homebuyers scared away by high mortgage rates have been Waiting on the sidelines Inventory has declined over the years, especially as sellers look to maintain pandemic-era prices (lock-in effect). Now that interest rates are falling, more buyers will decide they have the budget to afford a home.
Should you lock in your mortgage rate today?
If you have the ability, now is a good time Lock in low mortgage rates. Interest rates have not been this low in more than a year.
A lower interest rate means you can qualify for a larger loan amount or enjoy lower payments within your current budget. If you still feel the rate is too high, you can lower mortgage ratesalso.
all cash buyer People looking to avoid a mortgage altogether should also take action now to avoid potential price increases as interest rates continue to fall.
final thoughts
What if you are Buying a house in the market and have been scared away by high interest rates, now is a good time Contact an agent and start your home search. Interest rates are expected to continue falling slowly, and markets are ready. The longer you wait, the more competition you’ll see.
